Validity of time limit for availing input tax credit for FY 2017-18

1. Time limit for availing input tax credit

1.1. As per sub-section (4) of section 16 of the Central Goods and Services Tax Act, 2017 (the CGST Act), a definite timeline is prescribed for availing input tax credit on any inward supplies for the previous financial year ending March, 31 (“FY 201X-1X”).

1.2. The said timeline is the due date for furnishing the return for the month of September (under section 39 of the CGST Act) or furnishing of annual return, whichever is earlier. The relevant extract of the said provision is reproduced below:

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Section 16 of the CGST Act, 2017 – Eligibility and conditions for taking input tax credit:

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

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1.3. Given this, it is necessary to determine the return to be filed under sub-section (1) of section 39 of the CGST Act and the due date of filing of such return for the month of September, 2018.

2. Return under section 39 of the CGST Act

2.1. It is pertinent to note that, Sub-section (1) of section 39 of the CGST Act, provides that a return in such form and manner as may be prescribed shall be furnished on or before the 20th day of the succeeding month. The relevant extract of the said section is reproduced below:

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Section 39 of the CGST Act, 2017 – Furnishing of returns:

(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars as may be prescribed, on or before the twentieth day of the month succeeding such calendar month or part thereof.

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2.2. In light of the above, it is relevant to make reference to sub-rule (1) of rule 61 of the Central Goods and Service Tax Rules, 2017 (“CGST Rules”).

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Rule 61 – Form and manner of submission of monthly return

(1) Every registered person other than a person referred to in section 14 of the Integrated Goods and Services Tax Act, 2017 or an Input Service Distributor or a non-resident taxable person or a person paying tax under section 10 or section 51 or, as the case may be, under section 52 shall furnish a return specified under sub-section (1) of section 39 in FORM GSTR-3 electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

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2.3. Given the above, it is reasonable to conclude that FORM GSTR-3 is the return specified under sub-section (1) of section 39 of the CGST Act and that 20th of the subsequent month is the due date for filing of such return.

2.4. Thus, the time limit for availing of input tax credit for the FY 2017-18 would be October 20, 2018 (refer Para 1.1).

2.5. It is pertinent to note that, as of date the facility for filing return in FORM GSTR-3 is not available on the GSTN portal and only FORM GSTR-3B is required to be filed by a taxpayer for every tax period. (Further analysed in Para 4)

3. Is FORM GSTR-3B in lieu of FORM GSTR-3?

3.1. As per the originally notified CGST Rules[1], sub-rule (5) of rule 61 of the CGST Rules prescribed that FORM GSTR-3B should be furnished in lieu of FORM GSTR-3. The relevant extract of the said rule is reproduced below:

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Rule 61 – Form and manner of submission of monthly return:

(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, return in FORM GSTR-3B, in lieu of FORM GSTR-3, may be furnished in such manner and subject to such conditions as may be notified by the Commissioner.

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3.2. With effect from July 27, 2018, the said rule was amended to omit the words “in lieu of FORM GSTR-3”. The same as amended is reproduced below,

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Rule 61 – Form and manner of submission of monthly return:

(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, the Commissioner may, by notification, specify the manner and conditions subject to which the return shall be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.

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3.3. Given this, it is reasonable to conclude that the said amendment distinguished between FORM GSTR-3 and FORM GSTR-3B. The amendment recognized the separate identity of both the returns. Thus, a taxpayer for every tax period would be required to file both FORM GSTR-3B and FORM GSTR-3.

4. Due date for filing the return specified under sub-section (1) of section 39 of the CGST Act

4.1. As per the notifications[2] issued by the Central board of Indirect Taxes (“CBIC”) from time to time, the time period for filing the return under sub-section (1) of section 39 of the CGST Act is deferred until a suitable date to be notified in future.

4.2. As of today, no date has been notified as the due date for filing of FORM GSTR-3 for the tax periods July, 2017 to June, 2018.

5. My Sights

5.1. From a literal reading of the GST law, no restraint can be envisaged in availing input tax credit on inwards pertaining to FY 2017-18 beyond October 20, 2018.

5.2. Although, it is pertinent to note the presence of provisions for ‘delegation’ and ‘sub-delegation’ of legislative powers under the GST law. Basis such provisions, the Government, on the recommendations of the Council, may notify / prescribe other conditions and restriction for availing input tax credit.

5.3. In the light of the above, in addition to the time limit prescribed in sub-section (4) of section 16 of the CGST Act, conditions and restrictions may be prescribed / notified by the Government to provide for an end date for availing of input tax credit pertaining to FY 2017-18.

5.4. As a measure, all taxpayers should reconcile their purchase registers with FORM GSTR-2A and FORM GSTR-2A with FORM GSTR-3B well before the end of September, 2018. If need maybe, to avoid any mismatch of input tax credit, a vendor management should be performed to ensure seamless flow of input tax credit from the vendor.

5.5. The above state of taxpayers could be impeccably portrayed by John F. Kennedy’s renowned quote,

“We are tied to the ocean. And when we go back to the sea, whether it is to sail or to watch – we are going back from whence we came.”

Once we get on the bandwagon called GST, nevertheless the legal position we may embrace, we need to abide by the eleventh hour alterations brought in by the Government.

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Disclaimer: Views expressed here are completely personal and do not reflect ideologies, opinions or insights of any other person or organisation.

[1]

Notification No. 10/2017 – Central Tax dated 28^th June, 2017

[2]

Notification No. 58/2017 – Central Tax dated 15^th November, 2017;
Notification No. 71/2017 – Central Tax dated 29^th December, 2017;
Notification No. 72/2017 – Central Tax dated 29^th December, 2017;
Notification No. 17/2018 – Central Tax dated 28^th March, 2018;
Notification No. 18/2018 – Central Tax dated 28^th March, 2018;
Notification No. 32/2018 – Central Tax dated 10^th August, 2018; and
Notification No. 33/2018 – Central Tax dated 10^th August, 2018